ICONIQJanuary2026State ofAl: Bi-Annual SnapshotThe Execution Era ofAIad StictlyConfidential
IntroductionWe believe that building and operationalizing Al products is no longer just the new fonter ofcompetitive advantage but ratherbecoming table stakes inthe software world. In Q22025, we published *The AI Builder's Playbook " to elevate the voices of thearchitects,engineers, and product leaders driving this work and emphasize what it takes to conceive, deliver, and scale Al-poweredofferings end-to-end.Six months later, the picture is clearer. Over the last six months, we believe the AI market has entered a newphase ofmaturity. Whatstarted as the raceto experiment with large models and launch early AI features has increasingly evolved into a challengeofscaling Alinto durable. economically sound products.Giventhespeed ofevolution in this market. this report is designed as a bi-annual updateon howteams arebuilding. deploving monetizing. and using Al as adoption across the market matures.Thisreportrevists core dimensions of the builder's playbook, highlighting the mostimportant changes and developments overthelast six months.Grounded in our proprietarv022025and 042075gnrvaveofosat soflware comoanies building. Alproducts, alongside perspectives from ourICONIQ Community, the 2026 State of Al report seeks to offeralongitudinal operatorperspectiveon whatittakes to turnAI from a capabilitv into a durable competitive advantace.In our view. the findines point toaclear conclusion:AIleadership in 2026 will be defined by disciplined execution acrossproduct, cost, trust, andgo-to-marketExploreOurAlPerspectivesICONIOPrivate&SrictlyConfidentiall
DataRespondent FirmographicsByARRorRevenueRangeSources%oofRespondents12%12%& Methodology9%ThisstudysummarzesdatafomsaQ4202503000ducts, includingCEOs.HeadsofEnof Product. ChiefRevenue Officers,and ChiefFinancial Officers.S5M-9M$25M-$15Throughout his report,we compareinsights to ourpricpubishedinQ22025, "TheAlBuilder'sByHeadquartersicable. WhereByARRGrowthRatePlaybook",where applTinaldatahasbeen%ofRespondents%ofRespondentsnormalized to acountfordiffrences inrepresentative ofthedata.We also weave in insights and what we;beliveto be best pracices fom Alleadersfrom theICONIQ communityAllindustry perspectivesshared in thisreport have been anonymizedto protectcompany-level information.0.-9%10-19%20-29%30-49%50-99%100-149%150%NorthAmericaEuropeme but not allICONIO
From Models to Products: Where We See AI Differentiation Being BuileWe believe that AI product development has entered a phase of standardizationand maturitv.As the base models continue to improve, builders are no longerfocused on creating foundational models but instead on delivering differentiatedproducts at theapplicationlayer.Nearly 70% ofcompanies arebuildingverticalAlapplications reinforcingthat durable value is being created through domain-specific workflows ratherthan generalized inteligence. Consistent with this shift.490ofteamsnowcite aoolication-laverinnovation as their prima...
